A blog from the Center for Small Towns, a community outreach organization operated through the University of Minnesota, Morris. The Center prides itself on meeting the needs of small towns and organizations through a flexible, multi-faceted, community focused approach.

The Present and Future of Rural Child Care: Part IV

As part of an ongoing series on rural child care, Rebecca Haider dove into another of the hot topics surrounding child care today: cost and affordability. While a number of legislators, agencies, and advocacy groups are talking about the issue of cost, few seem to have a firm grasp on the statistics or impact in rural areas. As my last blog writing on this subject, this post summarizes the cost climate and provides possible next steps for you as advocates.

Anyone with kids will tell you that they are expensive (trust me, I haven’t stopped hearing it since we announced that we had one on the way). The cost of food, clothes, transportation, housing, school/extracurricular activities, and additional utilities add up quickly… but what about the cost of child care? As I’ve discussed previously, just finding care in rural areas is a tough feat for many parents, but finding “affordable” care has been described to me as “nearly impossible”. As discouraging as that was to hear, I thought it would be an important issue to address, so I started asking around to see what folks thought about this topic.

Just between my mom-friends and rural development professionals, I quickly came to the conclusion that everyone had their own idea of what “affordable” care looks like and how easy (or not) it is to find child care that fits that description. It seems to me that one’s definition of “affordable” would depend largely on their income, cost of living, and the cost of care in their area, keeping in mind that all of these might change over time. Since the U.S. Department of Health and Human Services (HHS) considers 10 percent of a
family’s income to be a benchmark for “affordable care,” I thought I’d see how states were doing by that standard. I was discouraged to find that a 2014 Child Care Aware report showed the average cost of center-based infant care exceeds 23 percent of median income for single parents in each of the 50 states; in Minnesota specifically, the average cost of center-based infant care exceeds 53 percent of the median single-mother’s income and exceeds 15 percent of the median two-parent income, among the worst in the nation.

When considering these statistics, it is important to note that we are examining center-based care costs, since these costs are more reliably reported and more easily available to the public. However, center-based care is often more expensive than family-based care (in fact, Minnesota has the largest difference between the two in the nation), so I wanted to see how much family-based care would cost. Since family-based care costs are harder to find, I focused specifically on Minnesota.

2015 Annual Cost of Care by Age Group

Metro Area

Outstate

Statewide

Centers

Family CC

Centers

Family CC

Centers

Family CC

Infants

$16,691.48

$9,300.72

$10,365.68

$6,960.72

$14,764.36

$7,989.80

Toddlers

$14,251.12

$8,811.40

$9,353.76

$6,639.88

$12,776.40

$7,599.28

Preschoolers

$12,609.48

$8,343.40

$8,606.52

$6,402.76

$11,379.16

$7,259.72

School-Agers

$10,298.60

$7,311.20

$7,476.56

$5,850.00

$9,442.68

$6,524.96

Minnesota Child Care Aware found that as of June 2015, infant care in outstate Minnesota (anything not in the metro area) cost nearly $7,000-$10,000. Let that sink in for a minute. If you are able to find a family provider with an opening for an infant (fewer and fewer even offer infant care), it will cost you about $135 per week. Note that rates for part-time and drop-in care are often much higher than those listed here, so these estimates are actually conservative. As a parent-to-be, that’s a scary thought.

But not all of outstate Minnesota is the same, right? If the average cost is $135 a week, some places have to be more expensive than that (hopefully the folks in those areas are making more) and some places have to be less expensive. The Department of Human Services conducts a survey on child care costs and releases the aggregated average child care costs for each of four groups of counties in the state: the cheapest, lower-middle, upper-middle, and most expensive counties. I looked at the costs for family-based care (since that is cheaper than center-based care) in the cheapest quartile of counties, and noticed that most of those were rural areas. Encouraging, right? But I know that rural areas tend to have lower wages than the metro, so I wanted to see if I could calculate what percentage of their income these parents were spending on care.

I was fortunate enough to find publicly available cost-of-care data for each of the green counties in the southwest corner of Minnesota. I used census data to determine the number of children of different ages and multiplied it by the cost-of-care for those age groups. I compared that cost to the overall income for parents in the area and found that even for the family-based care in this area with some of the least expensive child care in the state, parents were STILL spending at least 11% of their income on care on average. Remember that the federal HHS standard for “affordable” care is no more than 10%. I could go on and on citing statistics, but no matter how you look at it, child care costs a lot.

But why does it cost so much? In addition to standard business-operating expenses (rent/mortgage, utilities, insurance, marketing, taxes, etc.), child care providers have to pay for all their own supplies, toys/equipment, fire safety/security costs, and food for the children, all of which must meet certain standards and licensing requirements. While these costs definitely accumulate quickly, 70–80 percent of child care business expenses are for payroll and payroll-related expenditures. This is largely due to the labor-intensive nature of the work and the fact that both center-based and family-based child care require a certain number of adult staff members per child.

“[Still,] child care is one of the lowest paying professions nationally. The average income for a full-time child care professional in 2013 was $21,490, a decrease of $131 from 2012 when adjusted for inflation. The average wage for full-time child care workers was $10.33 per hour in 2013 – below the federal poverty guidelines for a family of four and barely above the poverty guidelines for a family of three. Family child care home providers earn even less. Studies show most work long hours, have no benefits such as health care and retirement plans, and earn $15,000 to $25,000 per year.” – 2014 Child Care Aware Report

As we heard from a number of providers at the November 2015 listening session in Morris, area providers are reluctant to raise their rates because they know families can’t afford care. As a 2014 Star Tribune article stated, “profit margins in child care can be as low as 10 cents per child per hour in the Twin Cities, and rural child-care businesses often operate at a loss.” Unfortunately, “Parents can’t pay out of pocket any more than they are, providers can’t afford to charge any less than they are.” – Ann McCully, executive director of Child Care Aware

But if parents can’t afford to pay any more and providers can’t afford to charge any less, what can we do? At the state level, Minnesota’s Child Care Assistance Program (CCAP) broadly provides financial assistance to help families with low income pay for child care so that parents may pursue employment or education leading to employment. Under this umbrella term, the Minnesota Family Investment Program (MFIP) and the Diversionary Work Program (DWP) each help families to work toward economic stability, while the Basic Sliding Fee (BSF) Child Care subprogram assists families with low incomes who are not participating in one of these other programs. While MFIP assistance is fully funded and has no waiting lists for assistance, assistance through BSF is limited by available funding so a number of families often go unserved. In fact, as of March 31, 2015, there were 4,417 families on the waiting list for BSF child care assistance, compared to about 8,700 families receiving monthly assistance.

In addition to state initiatives, about 2.6 million children received federal subsidies through one of several funding sources including the Child Care and Development Block Grant (CCDBG), Temporary Assistance for Needy Families (TANF) and the Social Services Block Grant (SSBG). Overall, CCDBG is the primary source of public funding for child care, providing grants to states to grant monthly subsidies or vouchers to low income families though these parents still pay around 10 percent of the cost of care as a co-payment. About 1.7 million children receive assistance nationwide through CCDBG, supporting approximately one out of every six eligible children. Tax credits like the Child and Dependent Care Tax Credit (CDCTC) are also available based on income, though funding has not always been consistent in previous years.

Acknowledging the difficulties we’ve addressed here, President Obama called affordable child care a “must-have” in last year’s State of the Union address:

“In today’s economy, when having both parents in the workforce is an economic necessity for many families, we need affordable, high-quality child care more than ever. It’s not a nice-to-have — it’s a must-have. So it’s time we stop treating child care as a side issue, or as a women’s issue, and treat it like the national economic priority that it is for all of us.”

I was encouraged to find that this was not an empty promise when I examined the 2015 budget proposal for 2016 which outlined “[increased] investment in the Child Care and Development Fund, tripling the maximum child care tax credit [CDCTC], and creating a new innovation fund to help states design programs that better serve families who face unique challenges in finding quality care, such as those in rural areas or working non-traditional hours” as key objectives. More recently, President Obama’s 2016 budget proposal for 2017 reaffirms his commitment to affordable child care initiatives by extending funding to Head Start programs and the CDCTC.

While this is incredibly promising for families, the 2017 budget isn’t up to him. The 2016 election will not only determine the new president, but also the new administration, and the 115th Congress who will approve the budget in late 2016. This brings me to do something I never thought I’d do–encourage everyone to get political. Those who know me, know that I can be cynical of the abstract “political realm” so I am hesitant to ask you all to do this, but after researching this topic for the last many months, I can’t stand by and watch it get worse and worse. I’m not advocating for any one candidate or party, but I am advocating for everyone to think about how your vote can impact the future of child care initiatives in your county, your state, and your country.

Maybe you don’t agree with income-based assistance – fine! Then consider supporting a candidate who promotes tax credits for all parents. Maybe you don’t know what you support yet – fine! Then call or write to your local legislators to ask their views on affordable child care. Maybe you don’t know how to start the conversation and just want to share this post (or the whole series) with your friends on social media – great (and thanks)! The important thing is that we encourage our lawmakers and fellow community members to be aware of the issues that parents are facing, particularly in rural and low income areas. By looking at the facts and talking about the issues we face, I think we can impact the availability, quality, and affordability of child care for everyone.

As always, we’d love to hear your perspectives on all things child care; leave a reply below, or tweet us @CforSmallTowns.

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One thought on “The Present and Future of Rural Child Care: Part IV”

Is there another way to think about this? I was a Family Childcare Provider when my children were young. My husband and I agreed when we got married that I would work outside the home until children became a reality for us, and then we would sacrifice my job at work for me staying at home with our small children. The plan that was when our children were both in school full time, we would consider me re-entering the workforce. This was in the mid to late eighties, and the economy was a little different then. IT WAS A SACRIFICE! We had to really tighten our belts for me to be home full time, but we realized that even if I went back to work, childcare for our two children would make that proposition a “break even” endeavor, There would be nothing left of my paycheck after paying for Childcare. I got to thinking the past week, would it be possible for Family Childcare Providers as well as Childcare Centers to file their businesses as Non-profit businesses rather than as LLC.s or for profit businesses, if that would open themselves up to more funding opportunities through private foundations? Something I have been puzzling through. Thanks for this blog, for those of us working in the field of Economic Development, we are keenly aware that this is definitely an ECONOMIC issue, as The President has indicated. It would be important, as you state, that we all communicate these concerns to our federal and state legislators, so that we correct this problem as soon as possible. Sincerely, Pamela J. Ellison, Director, Lac qui Parle County Economic Development Authority. director@lqpeda.com